Adirondack Health seeks to refinance debt

April 13, 2012

SARANAC LAKE - Adirondack Health is asking the Franklin County Civic Development Corporation to help refinance debts the hospital and nursing home provider incurred from a series of building projects over the last 20 years.

Adirondack Health spokesman Joe Riccio said the hospital wants to refinance old loans to get better interest rates.

"This is simply good financial stewardship," he said. "By refinancing these bonds, we're going to be saving $150,000 a year in interest. That's money we can reinvest back in programs, services and staff training. It makes sense to do it, if you can do it."

The CDC's board of directors, which includes the same members as the Franklin County Industrial Development Agency Board of Directors, voted Wednesday to provide an inducement resolution to issue $14 million in tax-exempt bonds for the refinancing. IDA Executive Director John Tubbs described that as a first step in the process.

The issuance of the bonds still needs to be approved by both the corporation's board and the Franklin County Legislature. Before that can happen, a public hearing has to be held on Adirondack Health's application. It's scheduled for 9 a.m. on April 27 in Malone.

Formed two years ago, the CDC's sole purpose is to issue bonds for civic facility projects, something nonprofits like Adirondack Health can't do on their own. This is only the second project to come before the corporation's board. In early 2011, it approved the issuance of $10 million in bonds for two Paul Smith's College projects: construction of a new 93-bed dormitory and a campus-wide energy conservation initiative.

Adirondack Health's application requests the corporation issue tax-exempt bonds in an amount currently estimated at $14 million, but not to exceed $15 million.

"Some of it is refunding an existing bond issue from the IDA, and taking out more money to pay for things they've already put in place," Tubbs said. "It will help the hospital to manage their cash flow and their debt, and to consolidate different funding arrangements into something that works for them going forward."

Specifically, the money would be used to refund old bonds the hospital was issued in the 1990s to pay for the building of an intensive care wing and new emergency room, renovations to the surgical area and other projects at the Adirondack Medical Center hospital in Saranac Lake. The new bonds would also help Adirondack Health refinance a loan it received from NBT Bank in 2007 to renovate and expand Mercy Living Center nursing home in Tupper Lake, add a dialysis unit to the nursing home and build a new medical office building on Stetson Road in Tupper Lake. AMC's application also says the new bonds would reimburse some of the hospital's expenses for its $2.7 million Wound and Hyperbaric Treatment Center off of Old Lake Colby Road, which was built last year and recently opened.

The approval of county legislators is needed for the interest on the bonds to be excluded from federal income tax. Tubbs noted there's no taxpayer money involved.

"The conditions under which bonds are issued is that they are no obligation of a taxing jurisdiction, a municipal entity or a subdivision thereof," Tubbs said. "It's really no obligation to the county. Realistically, we issue the bonds, and there are buyers and sellers on the marketplace. So, Adirondack Medical Center, instead of taking out a mortgage on something, will go to the market and borrow in the bond pool. They'll have a lender who will give them the money for this, and they'll simply repay it as a debt."

A copy of Adirondack Health's application is available for public review during normal business hours at the CDC's offices, 10 Elm St., Suite 2, in Malone.